Correlation Between PHX Energy and High Arctic
Can any of the company-specific risk be diversified away by investing in both PHX Energy and High Arctic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PHX Energy and High Arctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Energy Services and High Arctic Energy, you can compare the effects of market volatilities on PHX Energy and High Arctic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PHX Energy with a short position of High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and High Arctic.
Diversification Opportunities for PHX Energy and High Arctic
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PHX and High is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy and PHX Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PHX Energy Services are associated (or correlated) with High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of PHX Energy i.e., PHX Energy and High Arctic go up and down completely randomly.
Pair Corralation between PHX Energy and High Arctic
Assuming the 90 days trading horizon PHX Energy Services is expected to generate 0.79 times more return on investment than High Arctic. However, PHX Energy Services is 1.27 times less risky than High Arctic. It trades about 0.09 of its potential returns per unit of risk. High Arctic Energy is currently generating about 0.03 per unit of risk. If you would invest 938.00 in PHX Energy Services on August 28, 2024 and sell it today you would earn a total of 34.00 from holding PHX Energy Services or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Energy Services vs. High Arctic Energy
Performance |
| Timeline |
| PHX Energy Services |
| High Arctic Energy |
PHX Energy and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Energy and High Arctic
The main advantage of trading using opposite PHX Energy and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, High Arctic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in High Arctic will offset losses from the drop in High Arctic's long position.| PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
| High Arctic vs. CES Energy Solutions | High Arctic vs. Total Energy Services | High Arctic vs. PHX Energy Services |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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